No need to wait for UK. Scotland can launch own form of wealth tax

The National

14-07-2025

Wealth inequality is increasing at an unimaginable rate and is currently substantially higher than income inequality.
The rich are taking from all of us far more than they need and are giving back far less than what they are able to.
This is a self-reinforcing problem, such as where people who were able to buy houses when they were cheap (perhaps during Thatcher's Right to Buy demolition of the social housing sector) became able to rent them out at ever increasing rates to people who can't now afford to save a deposit to buy a house because prices are rising faster than they can save due to the amount they have to spend on rent.
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Even the Office for Budget Responsibility is now warning (as I did several years ago in my book All Of Our Futures) of the fiscal risks looming due to the number of people still privately renting when they retire and who will simultaneously be unable to afford to keep paying those rents and won't have any capital saved in their house to subsidise their inadequate state pensions.
It's not for no reason that the British public is increasingly demanding that the UK Government brings in a wealth tax to rebalance our increasingly unstable economy.
I will say there are good reasons for the UK to not bring in 'a wealth tax' – by which I mean a single annual payment calculated as a certain percentage of the value of all of the assets and possessions that you own. Professor Richard Murphy has articulated many of them well.
It's hard to value those possessions, and easy to hide them. And there are other taxes that the UK could use – such as reforms to taxes on stocks, shares, pensions and capital gains – that would achieve much of the same result.
Not that the UK Government is going to do any of that either, unless the pressure escalates to the point that the impossible becomes inevitable.
UK Prime Minister Keir Starmer (Image: PA) Let's say, however, that the Scottish Government wants to take the first step. Could we do it here instead of waiting for the UK?
The patterns of wealth ownership in Scotland are substantially different than in the rest of the UK, particularly London and the south-east of England. We don't have quite as many billionaires floating about the place.
We also don't have as much wealth in stocks and shares – mostly because we don't have a stock exchange in Scotland any more.
And our generally lower rates of pay mean comparatively lower rates of wealth stored in pensions. There are, however, two sectors in Scotland where wealth is substantially stored and which could be taxed using devolved tax powers: land and buildings. Scotland already has its Land and Buildings Transaction Tax, but despite the Scottish Greens seeking to apply what they called a 'mansion tax' to it, this would remain merely a surcharge on the transfer of assets, not a wealth tax applied to the holding of them.
If you never bought another mansion, you'd never pay the mansion tax.
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Meanwhile, Council Tax is the most outdated and badly broken tax Scotland still insists on inflicting on the poor. The Scottish Government has stated it is not even going to think about reforming it until the end of this decade. This is completely unacceptable, especially as the solution is obvious.
We need to scrap Council Tax and replace it with a tax based on a percentage of the present market value of the property.
Common Weal argued that a rate of 0.63% would have been revenue neutral compared to Council Tax at the time we published the paper.
That number could be recalculated now, but we estimated then that a 'revenue neutral' rate would actually mean a tax cut for eight out of 10 households as the burden of paying the tax would be placed more fairly on those who lived in the most expensive houses.
We calculated that the 'break even' point then would have been a house worth something like £400,000. This is based on a flat rate of tax, too. We would argue that councils should have the power to add progressive rates on extremely valuable properties, such as £1 million-plus mansions or, as is the case with the current Council Tax, additional multipliers for multiple home ownership.
This would immediately act as a wealth tax both on the most expensive properties but also on multiple property ownership.
Unlike Council Tax, which is paid by occupants, our Property Tax would be paid by property owners and they could only pass on to their tenants the basic rate of tax. Landlords would have to pay any multiple ownership surcharges themselves.
The second wealth store in Scotland, land, is probably the greatest store of almost untaxed wealth in the country. Many countries tax the ownership of land as a distinct tax from properties built on it, sometimes because of local democracy – for example, you might pay a land tax to your municipal government and property tax to your regional government.
In Scotland there may be good reason to not do that but to simply extend the Property Tax to cover not just the land under and around your mansion but also the broader estate you own with it.
Given that the two are often sold together, this would be much easier to put a price on than trying to calculate a separate Land Value Tax.
We've estimated that doing this at the same flat rate as the Property Tax would bring in around £450 million a year in revenue – though this could be adjusted down to account for subsidies for small farms or up to better tax the 422 people who own half of Scotland. One of the major advantages of both of these taxes – one that negates objections from both the UK and Scottish Government whenever taxes on the wealth have been suggested – is that they completely bypass the idea that the rich will simply leave the country.
Recent studies have shown that the idea of 'millionaire flight' basically isn't a thing.
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It's not just a huge logistical hassle for comparatively little financial gain to pack everything up to go and live in a tax haven, even millionaires have friends and family as do their kids and tearing up those social bonds to save a bit of money just isn't worth it. However, this hasn't stopped the media pushing that line anyway. Even if it was true, the wealth people have locked up in Scottish land and housing can't move with them.
The tax still needs to be paid by whoever owns them regardless of where they live (and many of the largest landowners in Scotland don't live here, so the point is particularly moot there).
One of the biggest sources of instability in our current society and economy is wealth inequality.
It urgently needs to be reined in and reversed.
If the UK Government persists in refusing to do it then there is at least something the Scottish Government can do without having to wait for them. And if the current Scottish Government doesn't want to do it either well, there are elections next year. Maybe politicians could suggest who we should vote for who will?